An insurance policy costs $130 and will pay policyholders $8,000 if they suffer a major injury (resulting in hospitalization) or $2500 if they suffer a minor injury (resulting in lost time from work). The company estimates that 1 in every

1969 policyholders will suffer a major injury and that 1 in 543 will suffer a minor injury.

What's the standard deviation?

Part 1

a) First find the probability and profit for each outcome.

x	P(event)	Profit
no injury	. 99765	130
major injury	. 000508	-7870
minor injury	. 001842	-2370

(Round to six decimal places as needed.)

Part 2

b) Find the expected profit on the policy.

E(X)=$121.33

(Round to two decimal places as needed.)

Part 3

c) Find the standard deviation on the policy.

(Round to two decimal places as needed.)